S&P 500 and Dow Jones Index erase loses
By Rick Paler
Wall Street traders returned from Monday’s holiday and renewed their fears of inflation after last Friday’s higher than expected PPI numbers. Tuesday saw oil prices shoot upwards and the dollar continued with its free fall causing fear. Overall the market later in the week overlooked inflation fears as positive economic data was released, oil prices fell and Japanese leaders said that they would continue buying U.S. government bonds Japan also said that it would not sell off their dollar bases investments. Earnings reports for the week were again generally positive with Hormel Foods and H&R Block beating estimates, while Home Depot and Staples met expectations.
The stock market continued with its broad based rally this week after a bad start to erase this year’s loses. The NASDAQ, while also improving this week continues to struggle as investors shy away from higher PE stocks and look for safer stock investments.
In general news Exxon Mobil (XON) surpassed General Electric (GE) as the largest capitalized company in the world. Higher oil prices have caused a run up in the company’s stock price.
Hormel Foods (HRL) reported that their fiscal first quarter earnings beat Wall Streets estimates by two cents. The maker of Spam, Stag Chili, Dinty Moore and Jenny-O said their net income for the quarter surged 24%. The company posted earnings of $0.46 per share or $64.5 million. Net sales at the company climbed to $1.27 billion up 12%. The company also raised guidance for their fiscal second quarter to $0.38 to $0.44 per share and boosted there full year guidance to $1.70 to $1.80 per share.
H&R Block (HRB) announced that their fiscal third quarter net income fell 14% to $0.55 per share. The company cited lower margins in their mortgage division. The company did however beat Wall Streets estimated by a nickel. The company also said they expect a good tax season.
Home Depot (HD) announced that former Secretary of the Department of Homeland Security, Tom Ridge will join the company’s board of directors. The company also said that they would increase their dividend by nearly 18% to $0.10 per share and repurchase an additional $2 billion of the company’s stock. Fourth quarter earnings at the company rose 11.9% to $1.09 billion or $0.47 per share matching analyst estimates. The company also reaffirmed their prior guidance for 2005 saying they expected earnings growth of 10% to 15% for the year.
Staples (SPLS) matched analyst estimates by posting earnings of $0.50 per share a 19% increase over last years results. Sales at the company rose 13%. Giving guidance the retailer said it expects to earn $0.29 to $0.30 per share for the first quarter.
Genuine Parts Company (GPC) reported record earnings and sales for 2004. Earnings at the company were up 11% from the prior year to $2.25 per share. Sales were up 8% to $9.1 billion. For the fourth quarter 2004 earnings came in at $0.55 per share up 10% year over year. While sales rose 8% to $2.25 billion.
Patterson Companies Inc. (PDCO) saw their fiscal third quarter earnings rise 25% to $0.36 per share or $50.1 million meeting the streets estimates. The dental, veterinary and rehabilitation supply company said it expects fourth quarter earning between $0.38 and $0.40 per share.
Additionally Quest Communications (Q) submitted another offer to purchase MCI (MCIP) that nearly matched Verizon Communication’s (VZ) offer. Federated Department Stores board of directors and May Department Stores (MAY) board will be meeting this weekend to discuss their possible merger.
Economic news this week was highlighted by the release of the fourth quarter GDP numbers. The Commerce Department said that the preliminary fourth quarter GDP rose more than economist had expected rising 3.8%. Economist had expected growth of only 3.7%. Economist attributed the rise to strong trade and business investment. Economists are now expecting the economy to continue with its strong growth between 3.5% and 4% for the first half of 2005. This is well ahead of historical norms and bodes well for the stock market.
After the poor PPI numbers released last Friday, that worried traders that inflation was picking up, the CPI numbers indicated that was not the case. The Consumer Price Index which measures inflation at the retail level came in at 0.1% and the core rate which excludes food and energy came in at 0.2%. Both numbers were in line with estimates.
In bonds yields rose across the entire yield curve this week as oil prices and the weaker dollar made traders think higher interest rates were down the road. The 5 year Treasury notes yield rose to 3.89%. The 5 year note increased to 4.26% and the 30 year bond ended that week higher at 4.63%.
Next week the market will continue to be swayed by oil prices and the dollar. Even as Wall Street becomes comfortable with the idea of oil prices of between $50.00 and $55.00 per barrel. Earnings releases will be lighter next week with H.J. Heinz Company (HNZ), Tiffany & Co. (TIF), Iron Mountain Inc. (IRM), Costco (COST) and Berkshire Hathaway (BRK.A / BRK.B) reporting.
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Friday, February 25, 2005
Weekly Market Report 02-25-2005
S&P 500 and Dow Jones Index erase loses
By Rick Paler
Wall Street traders returned from Monday’s holiday and renewed their fears of inflation after last Friday’s higher than expected PPI numbers. Tuesday saw oil prices shoot upwards and the dollar continued with its free fall causing fear. Overall the market later in the week overlooked inflation fears as positive economic data was released, oil prices fell and Japanese leaders said that they would continue buying U.S. government bonds Japan also said that it would not sell off their dollar bases investments. Earnings reports for the week were again generally positive with Hormel Foods and H&R Block beating estimates, while Home Depot and Staples met expectations.
The stock market continued with its broad based rally this week after a bad start to erase this year’s loses. The NASDAQ, while also improving this week continues to struggle as investors shy away from higher PE stocks and look for safer stock investments.
In general news Exxon Mobil (XON) surpassed General Electric (GE) as the largest capitalized company in the world. Higher oil prices have caused a run up in the company’s stock price.
Hormel Foods (HRL) reported that their fiscal first quarter earnings beat Wall Streets estimates by two cents. The maker of Spam, Stag Chili, Dinty Moore and Jenny-O said their net income for the quarter surged 24%. The company posted earnings of $0.46 per share or $64.5 million. Net sales at the company climbed to $1.27 billion up 12%. The company also raised guidance for their fiscal second quarter to $0.38 to $0.44 per share and boosted there full year guidance to $1.70 to $1.80 per share.
H&R Block (HRB) announced that their fiscal third quarter net income fell 14% to $0.55 per share. The company cited lower margins in their mortgage division. The company did however beat Wall Streets estimated by a nickel. The company also said they expect a good tax season.
Home Depot (HD) announced that former Secretary of the Department of Homeland Security, Tom Ridge will join the company’s board of directors. The company also said that they would increase their dividend by nearly 18% to $0.10 per share and repurchase an additional $2 billion of the company’s stock. Fourth quarter earnings at the company rose 11.9% to $1.09 billion or $0.47 per share matching analyst estimates. The company also reaffirmed their prior guidance for 2005 saying they expected earnings growth of 10% to 15% for the year.
Staples (SPLS) matched analyst estimates by posting earnings of $0.50 per share a 19% increase over last years results. Sales at the company rose 13%. Giving guidance the retailer said it expects to earn $0.29 to $0.30 per share for the first quarter.
Genuine Parts Company (GPC) reported record earnings and sales for 2004. Earnings at the company were up 11% from the prior year to $2.25 per share. Sales were up 8% to $9.1 billion. For the fourth quarter 2004 earnings came in at $0.55 per share up 10% year over year. While sales rose 8% to $2.25 billion.
Patterson Companies Inc. (PDCO) saw their fiscal third quarter earnings rise 25% to $0.36 per share or $50.1 million meeting the streets estimates. The dental, veterinary and rehabilitation supply company said it expects fourth quarter earning between $0.38 and $0.40 per share.
Additionally Quest Communications (Q) submitted another offer to purchase MCI (MCIP) that nearly matched Verizon Communication’s (VZ) offer. Federated Department Stores board of directors and May Department Stores (MAY) board will be meeting this weekend to discuss their possible merger.
Economic news this week was highlighted by the release of the fourth quarter GDP numbers. The Commerce Department said that the preliminary fourth quarter GDP rose more than economist had expected rising 3.8%. Economist had expected growth of only 3.7%. Economist attributed the rise to strong trade and business investment. Economists are now expecting the economy to continue with its strong growth between 3.5% and 4% for the first half of 2005. This is well ahead of historical norms and bodes well for the stock market.
After the poor PPI numbers released last Friday, that worried traders that inflation was picking up, the CPI numbers indicated that was not the case. The Consumer Price Index which measures inflation at the retail level came in at 0.1% and the core rate which excludes food and energy came in at 0.2%. Both numbers were in line with estimates.
In bonds yields rose across the entire yield curve this week as oil prices and the weaker dollar made traders think higher interest rates were down the road. The 5 year Treasury notes yield rose to 3.89%. The 5 year note increased to 4.26% and the 30 year bond ended that week higher at 4.63%.
Next week the market will continue to be swayed by oil prices and the dollar. Even as Wall Street becomes comfortable with the idea of oil prices of between $50.00 and $55.00 per barrel. Earnings releases will be lighter next week with H.J. Heinz Company (HNZ), Tiffany & Co. (TIF), Iron Mountain Inc. (IRM), Costco (COST) and Berkshire Hathaway (BRK.A / BRK.B) reporting.
By Rick Paler
Wall Street traders returned from Monday’s holiday and renewed their fears of inflation after last Friday’s higher than expected PPI numbers. Tuesday saw oil prices shoot upwards and the dollar continued with its free fall causing fear. Overall the market later in the week overlooked inflation fears as positive economic data was released, oil prices fell and Japanese leaders said that they would continue buying U.S. government bonds Japan also said that it would not sell off their dollar bases investments. Earnings reports for the week were again generally positive with Hormel Foods and H&R Block beating estimates, while Home Depot and Staples met expectations.
The stock market continued with its broad based rally this week after a bad start to erase this year’s loses. The NASDAQ, while also improving this week continues to struggle as investors shy away from higher PE stocks and look for safer stock investments.
In general news Exxon Mobil (XON) surpassed General Electric (GE) as the largest capitalized company in the world. Higher oil prices have caused a run up in the company’s stock price.
Hormel Foods (HRL) reported that their fiscal first quarter earnings beat Wall Streets estimates by two cents. The maker of Spam, Stag Chili, Dinty Moore and Jenny-O said their net income for the quarter surged 24%. The company posted earnings of $0.46 per share or $64.5 million. Net sales at the company climbed to $1.27 billion up 12%. The company also raised guidance for their fiscal second quarter to $0.38 to $0.44 per share and boosted there full year guidance to $1.70 to $1.80 per share.
H&R Block (HRB) announced that their fiscal third quarter net income fell 14% to $0.55 per share. The company cited lower margins in their mortgage division. The company did however beat Wall Streets estimated by a nickel. The company also said they expect a good tax season.
Home Depot (HD) announced that former Secretary of the Department of Homeland Security, Tom Ridge will join the company’s board of directors. The company also said that they would increase their dividend by nearly 18% to $0.10 per share and repurchase an additional $2 billion of the company’s stock. Fourth quarter earnings at the company rose 11.9% to $1.09 billion or $0.47 per share matching analyst estimates. The company also reaffirmed their prior guidance for 2005 saying they expected earnings growth of 10% to 15% for the year.
Staples (SPLS) matched analyst estimates by posting earnings of $0.50 per share a 19% increase over last years results. Sales at the company rose 13%. Giving guidance the retailer said it expects to earn $0.29 to $0.30 per share for the first quarter.
Genuine Parts Company (GPC) reported record earnings and sales for 2004. Earnings at the company were up 11% from the prior year to $2.25 per share. Sales were up 8% to $9.1 billion. For the fourth quarter 2004 earnings came in at $0.55 per share up 10% year over year. While sales rose 8% to $2.25 billion.
Patterson Companies Inc. (PDCO) saw their fiscal third quarter earnings rise 25% to $0.36 per share or $50.1 million meeting the streets estimates. The dental, veterinary and rehabilitation supply company said it expects fourth quarter earning between $0.38 and $0.40 per share.
Additionally Quest Communications (Q) submitted another offer to purchase MCI (MCIP) that nearly matched Verizon Communication’s (VZ) offer. Federated Department Stores board of directors and May Department Stores (MAY) board will be meeting this weekend to discuss their possible merger.
Economic news this week was highlighted by the release of the fourth quarter GDP numbers. The Commerce Department said that the preliminary fourth quarter GDP rose more than economist had expected rising 3.8%. Economist had expected growth of only 3.7%. Economist attributed the rise to strong trade and business investment. Economists are now expecting the economy to continue with its strong growth between 3.5% and 4% for the first half of 2005. This is well ahead of historical norms and bodes well for the stock market.
After the poor PPI numbers released last Friday, that worried traders that inflation was picking up, the CPI numbers indicated that was not the case. The Consumer Price Index which measures inflation at the retail level came in at 0.1% and the core rate which excludes food and energy came in at 0.2%. Both numbers were in line with estimates.
In bonds yields rose across the entire yield curve this week as oil prices and the weaker dollar made traders think higher interest rates were down the road. The 5 year Treasury notes yield rose to 3.89%. The 5 year note increased to 4.26% and the 30 year bond ended that week higher at 4.63%.
Next week the market will continue to be swayed by oil prices and the dollar. Even as Wall Street becomes comfortable with the idea of oil prices of between $50.00 and $55.00 per barrel. Earnings releases will be lighter next week with H.J. Heinz Company (HNZ), Tiffany & Co. (TIF), Iron Mountain Inc. (IRM), Costco (COST) and Berkshire Hathaway (BRK.A / BRK.B) reporting.
Weekly Market Report 02-25-2005
S&P 500 and Dow Jones Index erase loses
By Rick Paler
Wall Street traders returned from Monday’s holiday and renewed their fears of inflation after last Friday’s higher than expected PPI numbers. Tuesday saw oil prices shoot upwards and the dollar continued with its free fall causing fear. Overall the market later in the week overlooked inflation fears as positive economic data was released, oil prices fell and Japanese leaders said that they would continue buying U.S. government bonds Japan also said that it would not sell off their dollar bases investments. Earnings reports for the week were again generally positive with Hormel Foods and H&R Block beating estimates, while Home Depot and Staples met expectations.
The stock market continued with its broad based rally this week after a bad start to erase this year’s loses. The NASDAQ, while also improving this week continues to struggle as investors shy away from higher PE stocks and look for safer stock investments.
In general news Exxon Mobil (XON) surpassed General Electric (GE) as the largest capitalized company in the world. Higher oil prices have caused a run up in the company’s stock price.
Hormel Foods (HRL) reported that their fiscal first quarter earnings beat Wall Streets estimates by two cents. The maker of Spam, Stag Chili, Dinty Moore and Jenny-O said their net income for the quarter surged 24%. The company posted earnings of $0.46 per share or $64.5 million. Net sales at the company climbed to $1.27 billion up 12%. The company also raised guidance for their fiscal second quarter to $0.38 to $0.44 per share and boosted there full year guidance to $1.70 to $1.80 per share.
H&R Block (HRB) announced that their fiscal third quarter net income fell 14% to $0.55 per share. The company cited lower margins in their mortgage division. The company did however beat Wall Streets estimated by a nickel. The company also said they expect a good tax season.
Home Depot (HD) announced that former Secretary of the Department of Homeland Security, Tom Ridge will join the company’s board of directors. The company also said that they would increase their dividend by nearly 18% to $0.10 per share and repurchase an additional $2 billion of the company’s stock. Fourth quarter earnings at the company rose 11.9% to $1.09 billion or $0.47 per share matching analyst estimates. The company also reaffirmed their prior guidance for 2005 saying they expected earnings growth of 10% to 15% for the year.
Staples (SPLS) matched analyst estimates by posting earnings of $0.50 per share a 19% increase over last years results. Sales at the company rose 13%. Giving guidance the retailer said it expects to earn $0.29 to $0.30 per share for the first quarter.
Genuine Parts Company (GPC) reported record earnings and sales for 2004. Earnings at the company were up 11% from the prior year to $2.25 per share. Sales were up 8% to $9.1 billion. For the fourth quarter 2004 earnings came in at $0.55 per share up 10% year over year. While sales rose 8% to $2.25 billion.
Patterson Companies Inc. (PDCO) saw their fiscal third quarter earnings rise 25% to $0.36 per share or $50.1 million meeting the streets estimates. The dental, veterinary and rehabilitation supply company said it expects fourth quarter earning between $0.38 and $0.40 per share.
Additionally Quest Communications (Q) submitted another offer to purchase MCI (MCIP) that nearly matched Verizon Communication’s (VZ) offer. Federated Department Stores board of directors and May Department Stores (MAY) board will be meeting this weekend to discuss their possible merger.
Economic news this week was highlighted by the release of the fourth quarter GDP numbers. The Commerce Department said that the preliminary fourth quarter GDP rose more than economist had expected rising 3.8%. Economist had expected growth of only 3.7%. Economist attributed the rise to strong trade and business investment. Economists are now expecting the economy to continue with its strong growth between 3.5% and 4% for the first half of 2005. This is well ahead of historical norms and bodes well for the stock market.
After the poor PPI numbers released last Friday, that worried traders that inflation was picking up, the CPI numbers indicated that was not the case. The Consumer Price Index which measures inflation at the retail level came in at 0.1% and the core rate which excludes food and energy came in at 0.2%. Both numbers were in line with estimates.
In bonds yields rose across the entire yield curve this week as oil prices and the weaker dollar made traders think higher interest rates were down the road. The 5 year Treasury notes yield rose to 3.89%. The 5 year note increased to 4.26% and the 30 year bond ended that week higher at 4.63%.
Next week the market will continue to be swayed by oil prices and the dollar. Even as Wall Street becomes comfortable with the idea of oil prices of between $50.00 and $55.00 per barrel. Earnings releases will be lighter next week with H.J. Heinz Company (HNZ), Tiffany & Co. (TIF), Iron Mountain Inc. (IRM), Costco (COST) and Berkshire Hathaway (BRK.A / BRK.B) reporting.
By Rick Paler
Wall Street traders returned from Monday’s holiday and renewed their fears of inflation after last Friday’s higher than expected PPI numbers. Tuesday saw oil prices shoot upwards and the dollar continued with its free fall causing fear. Overall the market later in the week overlooked inflation fears as positive economic data was released, oil prices fell and Japanese leaders said that they would continue buying U.S. government bonds Japan also said that it would not sell off their dollar bases investments. Earnings reports for the week were again generally positive with Hormel Foods and H&R Block beating estimates, while Home Depot and Staples met expectations.
The stock market continued with its broad based rally this week after a bad start to erase this year’s loses. The NASDAQ, while also improving this week continues to struggle as investors shy away from higher PE stocks and look for safer stock investments.
In general news Exxon Mobil (XON) surpassed General Electric (GE) as the largest capitalized company in the world. Higher oil prices have caused a run up in the company’s stock price.
Hormel Foods (HRL) reported that their fiscal first quarter earnings beat Wall Streets estimates by two cents. The maker of Spam, Stag Chili, Dinty Moore and Jenny-O said their net income for the quarter surged 24%. The company posted earnings of $0.46 per share or $64.5 million. Net sales at the company climbed to $1.27 billion up 12%. The company also raised guidance for their fiscal second quarter to $0.38 to $0.44 per share and boosted there full year guidance to $1.70 to $1.80 per share.
H&R Block (HRB) announced that their fiscal third quarter net income fell 14% to $0.55 per share. The company cited lower margins in their mortgage division. The company did however beat Wall Streets estimated by a nickel. The company also said they expect a good tax season.
Home Depot (HD) announced that former Secretary of the Department of Homeland Security, Tom Ridge will join the company’s board of directors. The company also said that they would increase their dividend by nearly 18% to $0.10 per share and repurchase an additional $2 billion of the company’s stock. Fourth quarter earnings at the company rose 11.9% to $1.09 billion or $0.47 per share matching analyst estimates. The company also reaffirmed their prior guidance for 2005 saying they expected earnings growth of 10% to 15% for the year.
Staples (SPLS) matched analyst estimates by posting earnings of $0.50 per share a 19% increase over last years results. Sales at the company rose 13%. Giving guidance the retailer said it expects to earn $0.29 to $0.30 per share for the first quarter.
Genuine Parts Company (GPC) reported record earnings and sales for 2004. Earnings at the company were up 11% from the prior year to $2.25 per share. Sales were up 8% to $9.1 billion. For the fourth quarter 2004 earnings came in at $0.55 per share up 10% year over year. While sales rose 8% to $2.25 billion.
Patterson Companies Inc. (PDCO) saw their fiscal third quarter earnings rise 25% to $0.36 per share or $50.1 million meeting the streets estimates. The dental, veterinary and rehabilitation supply company said it expects fourth quarter earning between $0.38 and $0.40 per share.
Additionally Quest Communications (Q) submitted another offer to purchase MCI (MCIP) that nearly matched Verizon Communication’s (VZ) offer. Federated Department Stores board of directors and May Department Stores (MAY) board will be meeting this weekend to discuss their possible merger.
Economic news this week was highlighted by the release of the fourth quarter GDP numbers. The Commerce Department said that the preliminary fourth quarter GDP rose more than economist had expected rising 3.8%. Economist had expected growth of only 3.7%. Economist attributed the rise to strong trade and business investment. Economists are now expecting the economy to continue with its strong growth between 3.5% and 4% for the first half of 2005. This is well ahead of historical norms and bodes well for the stock market.
After the poor PPI numbers released last Friday, that worried traders that inflation was picking up, the CPI numbers indicated that was not the case. The Consumer Price Index which measures inflation at the retail level came in at 0.1% and the core rate which excludes food and energy came in at 0.2%. Both numbers were in line with estimates.
In bonds yields rose across the entire yield curve this week as oil prices and the weaker dollar made traders think higher interest rates were down the road. The 5 year Treasury notes yield rose to 3.89%. The 5 year note increased to 4.26% and the 30 year bond ended that week higher at 4.63%.
Next week the market will continue to be swayed by oil prices and the dollar. Even as Wall Street becomes comfortable with the idea of oil prices of between $50.00 and $55.00 per barrel. Earnings releases will be lighter next week with H.J. Heinz Company (HNZ), Tiffany & Co. (TIF), Iron Mountain Inc. (IRM), Costco (COST) and Berkshire Hathaway (BRK.A / BRK.B) reporting.
Saturday, February 19, 2005
Weekly Market Report 02-18-2005
Greenspan says economy expanding
By Rick Paler
Stock and bond traders were focused this week on Federal Reserve Chairman Alan Greenspan’s testimony before the Senate Banking Committee, which occurred on Wednesday. Traders were looking for hints about were interest rates will head, inflation and the general health of the economy. Earnings releases this week continued to come in strong, with Coca-Cola, Wal-Mart, and Target all posting better than expected earnings. The much anticipated FDA advisory panel reviewed the safety of Cox-2 inhibitors. Economic data released this week was mixed. While bond rates moved higher.
During Fed Chairman Alan Greenspan’s testimony he said “All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation expectations well anchored.” He also commented on long term bond yields. Although the Fed Funds rate has risen 1.5% in the last year, long term bond yields have fallen. Typically long term bond rates should have also moved higher. He citied three possible reasons for the decline in long term rates, expectations that inflation will not be a problem, a surplus in foreign capital come into the bond market and mortgage investors investing into long term bonds. In his remarks he called it a “conundrum” and “aberration”.
In Earnings news Coca-Cola (KO) posted better than expected results. The company reported a 30% gain in their fourth quarter net income or $0.50 per share as revenues grew to $5.26 billion. Excluding charges the company earned $0.46 per share beating analyst estimates of only $0.40 per share.
Closely watch bellwether Wal-Mart Stores (WMT) beat earnings estimated by a penny. The world’s largest retailer announced that their fourth quarter profits rose to $3.16 billion or $0.75 per share. Revenues at the company increased to $82.2 billion. Giving guidance for the first quarter the company said it expects to earn $0.56 to $0.58 per share.
Target (TGT) also beat Wall Streets estimates by a penny. The retailer reported earnings of $0.90 per share as same-store sales increased 5.4%.Giving guidance, the company said it sees 2005 earnings growth of 20% and said that it was comfortable with the streets estimates of $2.55 per share.
Medical device company, Advanced Neuromodulation Systems Inc. (ANSI) reported that fourth quarter earnings increased 38% to $0.24 per share. Analyst had estimated that the company would only earn $0.25 per share. Revenues at the company surged 26% to $32.3 million. The company also announced a share repurchase program that would allow the company to buy up to one million shares.
HCC Insurance Holdings Inc. (HCC) reported that their earnings more than doubled in the fourth quarter. The company posted net earnings of $0.84 per share. For all off 2004 the company’s earnings grew by 45% coming in at $2.47 per share. Chairman and CEO Stephen Way said “2004 was the best year in our history and we are confident of improving on this in 2005.” oldi
Pharmaceutical giants Pfizer (PFE) and Merck (MRK) both received good news this week when a FDA panel recommended that Pfizer’s Cox-2 inhibitor Celebrex and Bextra could stay on the market and Merck who had pulled their Cox-2 inhibitor Vioxx painkiller from the market could be allowed to return. Both companies would have to disclose warnings that the drugs may increase the risk of heart attacks and strokes. Pfizer shares closed up 6.9% on the news, while Merck shares closed up 13%. The ruling might protect the companies from possible future litigation.
In economic news, the Empire Manufacturing Index missed expectations but still indicated that manufacturing in New York continues to grow. Unexpectedly the PPI jumped well above economist estimates leading to fears of inflation. The core rate for January which excludes food and energy jumped up 0.8%, economist had expected a rise of only 0.2%.
Bond rate rose across all maturities after Mr. Greenspan’s comments about long bond yields. The 5 year Treasury note closed yielding 3.85%, while the 10 year and 30 year yields increased to 4.26% and 4.65% respectively.
Traders will continue with their cautious stance next week as they try to figure out the mystery of the long term bond yields. Traders are concerned that the yields are indicating something the market is not seeing right now. Next week companies releasing earnings that are of interest are; Genuine Parts (GPC), Home Depot (HD), Hormel Foods (HRL), The TJX Companies (TJX), Toll Brothers (TOL), Gap Inc. (GPS), and Patterson Dental (PDCO).
By Rick Paler
Stock and bond traders were focused this week on Federal Reserve Chairman Alan Greenspan’s testimony before the Senate Banking Committee, which occurred on Wednesday. Traders were looking for hints about were interest rates will head, inflation and the general health of the economy. Earnings releases this week continued to come in strong, with Coca-Cola, Wal-Mart, and Target all posting better than expected earnings. The much anticipated FDA advisory panel reviewed the safety of Cox-2 inhibitors. Economic data released this week was mixed. While bond rates moved higher.
During Fed Chairman Alan Greenspan’s testimony he said “All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation expectations well anchored.” He also commented on long term bond yields. Although the Fed Funds rate has risen 1.5% in the last year, long term bond yields have fallen. Typically long term bond rates should have also moved higher. He citied three possible reasons for the decline in long term rates, expectations that inflation will not be a problem, a surplus in foreign capital come into the bond market and mortgage investors investing into long term bonds. In his remarks he called it a “conundrum” and “aberration”.
In Earnings news Coca-Cola (KO) posted better than expected results. The company reported a 30% gain in their fourth quarter net income or $0.50 per share as revenues grew to $5.26 billion. Excluding charges the company earned $0.46 per share beating analyst estimates of only $0.40 per share.
Closely watch bellwether Wal-Mart Stores (WMT) beat earnings estimated by a penny. The world’s largest retailer announced that their fourth quarter profits rose to $3.16 billion or $0.75 per share. Revenues at the company increased to $82.2 billion. Giving guidance for the first quarter the company said it expects to earn $0.56 to $0.58 per share.
Target (TGT) also beat Wall Streets estimates by a penny. The retailer reported earnings of $0.90 per share as same-store sales increased 5.4%.Giving guidance, the company said it sees 2005 earnings growth of 20% and said that it was comfortable with the streets estimates of $2.55 per share.
Medical device company, Advanced Neuromodulation Systems Inc. (ANSI) reported that fourth quarter earnings increased 38% to $0.24 per share. Analyst had estimated that the company would only earn $0.25 per share. Revenues at the company surged 26% to $32.3 million. The company also announced a share repurchase program that would allow the company to buy up to one million shares.
HCC Insurance Holdings Inc. (HCC) reported that their earnings more than doubled in the fourth quarter. The company posted net earnings of $0.84 per share. For all off 2004 the company’s earnings grew by 45% coming in at $2.47 per share. Chairman and CEO Stephen Way said “2004 was the best year in our history and we are confident of improving on this in 2005.” oldi
Pharmaceutical giants Pfizer (PFE) and Merck (MRK) both received good news this week when a FDA panel recommended that Pfizer’s Cox-2 inhibitor Celebrex and Bextra could stay on the market and Merck who had pulled their Cox-2 inhibitor Vioxx painkiller from the market could be allowed to return. Both companies would have to disclose warnings that the drugs may increase the risk of heart attacks and strokes. Pfizer shares closed up 6.9% on the news, while Merck shares closed up 13%. The ruling might protect the companies from possible future litigation.
In economic news, the Empire Manufacturing Index missed expectations but still indicated that manufacturing in New York continues to grow. Unexpectedly the PPI jumped well above economist estimates leading to fears of inflation. The core rate for January which excludes food and energy jumped up 0.8%, economist had expected a rise of only 0.2%.
Bond rate rose across all maturities after Mr. Greenspan’s comments about long bond yields. The 5 year Treasury note closed yielding 3.85%, while the 10 year and 30 year yields increased to 4.26% and 4.65% respectively.
Traders will continue with their cautious stance next week as they try to figure out the mystery of the long term bond yields. Traders are concerned that the yields are indicating something the market is not seeing right now. Next week companies releasing earnings that are of interest are; Genuine Parts (GPC), Home Depot (HD), Hormel Foods (HRL), The TJX Companies (TJX), Toll Brothers (TOL), Gap Inc. (GPS), and Patterson Dental (PDCO).
Friday, February 11, 2005
Weekly Market Report 02-11-2005
Dell and Cisco disappoint analyst
By Rick Paler
This week was a slower week for earnings releases. Only 46 companies that make up the S&P 500 index reported. The two big earnings reports of the week were Dell and Cisco, unfortunately both disappointed. Also in the Technology sector, Hewlett-Packard’s CEO unexpectedly resigned. There was little to report this week on economic news which left bond traders looking to next week for direction.
As the fourth quarter earnings season comes to a close it looks like the S&P 500 posted some great numbers, once again exceeding the streets estimates. Now Wall Street is digesting corporate guidance for the first quarter. Currently the street is projecting profit growth of 6.9% up from 6.6%. While this number is substantially lower than last years earnings numbers, 7% year over year earnings growth is respectable and inline with historical levels.
Technology bellwether Cisco Systems (CSCO) reported that their fiscal second quarter earnings came in at $0.22 per share matching the streets estimates. Sale rose 12% to $6.06 billion which was near the company’s lower end of guidance. The company also announced their guidance for next quarter and disappointed the market. Looking at the next quarter the company expects that their fiscal third quarter revenue would be flat to up only 2%.
Dell (DELL) reported that their fiscal fourth quarter earnings came in at $0.37 per share beating expectations by a penny as revenues grew to $13.46 billion up 17%. The company also announced that their U.S. market share of PC’s had grown to 33%. Looking forward the company disappointed the market when they released their fiscal first quarter guidance. The company expects their first quarter revenues to come in at $13.4 billion and earnings of $0.37 per share. The street had expected revenues of $13.5 billion and earnings of $0.36 per share.
Cognizant Technology Solutions (CTSH) announced that their fourth quarter profits rocketed up 73%. The company earned $30.6 million or $0.21 per share, up from only $17.7 million or $0.13 per share for the same period a year ago. Revenues at the company also surged up 60% to $172.8 million. The IT service company also released first quarter guidance that was inline with analyst estimates. Full year guidance was ahead of current estimates. The company expects to earn $0.96 per share, on revenues of $845 million. Shares rose sharply on the news.
Clorox (CLX) reported fiscal second quarter earnings of $0.59 per share beating Wall Streets estimates of $0.52 per share. Sales at the company rose 8.7% to $1.0 billion. Guidance released by the company for their fiscal third quarter was inline with analyst estimates. The company expects earnings between $0.62 and $0.68 per share.
Hewlett-Packard’s (HPQ) CEO Carly Fiorina unexpectedly resigned after being forced out by the company’s board of directors. The company’s shares rose initially on the news. The company continues to lose market share to competitors even after the much publicized purchase of Compaq. The board of director will begin looking for a new CEO immediately to replace her.
Pfizer (PFE) announced that the company would implement a reorganization plan that would save the company $2 billion. The plan would change the way the company markets drugs to physicians and would not include layoffs, but would lower the company’s employee head count through normal attrition.
Black & Decker Corp. (BDK) will increase their dividend 33% to $0.28 per share from the prior $0.21 per share. The company also announced that they would repurchase an additional 2.5 million shares of the company’s stock.
In economic news there were two reports released this week that were of interest. Initial jobless claims fell unexpectedly to 303,000 versus economist estimates of 325,000. This was the lowest level in for years. The four week moving average also fell to a four year low of 315,500. This was interrupted by the market that the job market is continuing to improve.
The trade deficit for December fell to $56.4 billion from the prior months $59.3 billion. Economist had expected the deficit to come in at $57.0 billion. For the full 2004 year the trade deficit increased 24.4% to a record $617.7 billion as demand and higher prices for oil pushed the deficit higher.
The 5 year Treasury note closed the week yielding 3.68%. The 10 year note closed at 4.08% and the 30 year Treasury bond closed yielding 4.47%.
Next week there will be more economic news released. Traders will be digesting the release of retail sale, industrial production, housing starts and the PPI. The market will also watch Federal Reserve Chairman Alan Greenspan as he testifies before the Senate Banking Committee. Next week the following companies will be releasing earnings; Deere & Company (DE), HCC Insurance Holdings (HCC), Nordstrom (JWN), Hewlett-Packard (HPQ), Intuit (INTU), Target Corp (TGT), and Wal-Mart (WMT).
By Rick Paler
This week was a slower week for earnings releases. Only 46 companies that make up the S&P 500 index reported. The two big earnings reports of the week were Dell and Cisco, unfortunately both disappointed. Also in the Technology sector, Hewlett-Packard’s CEO unexpectedly resigned. There was little to report this week on economic news which left bond traders looking to next week for direction.
As the fourth quarter earnings season comes to a close it looks like the S&P 500 posted some great numbers, once again exceeding the streets estimates. Now Wall Street is digesting corporate guidance for the first quarter. Currently the street is projecting profit growth of 6.9% up from 6.6%. While this number is substantially lower than last years earnings numbers, 7% year over year earnings growth is respectable and inline with historical levels.
Technology bellwether Cisco Systems (CSCO) reported that their fiscal second quarter earnings came in at $0.22 per share matching the streets estimates. Sale rose 12% to $6.06 billion which was near the company’s lower end of guidance. The company also announced their guidance for next quarter and disappointed the market. Looking at the next quarter the company expects that their fiscal third quarter revenue would be flat to up only 2%.
Dell (DELL) reported that their fiscal fourth quarter earnings came in at $0.37 per share beating expectations by a penny as revenues grew to $13.46 billion up 17%. The company also announced that their U.S. market share of PC’s had grown to 33%. Looking forward the company disappointed the market when they released their fiscal first quarter guidance. The company expects their first quarter revenues to come in at $13.4 billion and earnings of $0.37 per share. The street had expected revenues of $13.5 billion and earnings of $0.36 per share.
Cognizant Technology Solutions (CTSH) announced that their fourth quarter profits rocketed up 73%. The company earned $30.6 million or $0.21 per share, up from only $17.7 million or $0.13 per share for the same period a year ago. Revenues at the company also surged up 60% to $172.8 million. The IT service company also released first quarter guidance that was inline with analyst estimates. Full year guidance was ahead of current estimates. The company expects to earn $0.96 per share, on revenues of $845 million. Shares rose sharply on the news.
Clorox (CLX) reported fiscal second quarter earnings of $0.59 per share beating Wall Streets estimates of $0.52 per share. Sales at the company rose 8.7% to $1.0 billion. Guidance released by the company for their fiscal third quarter was inline with analyst estimates. The company expects earnings between $0.62 and $0.68 per share.
Hewlett-Packard’s (HPQ) CEO Carly Fiorina unexpectedly resigned after being forced out by the company’s board of directors. The company’s shares rose initially on the news. The company continues to lose market share to competitors even after the much publicized purchase of Compaq. The board of director will begin looking for a new CEO immediately to replace her.
Pfizer (PFE) announced that the company would implement a reorganization plan that would save the company $2 billion. The plan would change the way the company markets drugs to physicians and would not include layoffs, but would lower the company’s employee head count through normal attrition.
Black & Decker Corp. (BDK) will increase their dividend 33% to $0.28 per share from the prior $0.21 per share. The company also announced that they would repurchase an additional 2.5 million shares of the company’s stock.
In economic news there were two reports released this week that were of interest. Initial jobless claims fell unexpectedly to 303,000 versus economist estimates of 325,000. This was the lowest level in for years. The four week moving average also fell to a four year low of 315,500. This was interrupted by the market that the job market is continuing to improve.
The trade deficit for December fell to $56.4 billion from the prior months $59.3 billion. Economist had expected the deficit to come in at $57.0 billion. For the full 2004 year the trade deficit increased 24.4% to a record $617.7 billion as demand and higher prices for oil pushed the deficit higher.
The 5 year Treasury note closed the week yielding 3.68%. The 10 year note closed at 4.08% and the 30 year Treasury bond closed yielding 4.47%.
Next week there will be more economic news released. Traders will be digesting the release of retail sale, industrial production, housing starts and the PPI. The market will also watch Federal Reserve Chairman Alan Greenspan as he testifies before the Senate Banking Committee. Next week the following companies will be releasing earnings; Deere & Company (DE), HCC Insurance Holdings (HCC), Nordstrom (JWN), Hewlett-Packard (HPQ), Intuit (INTU), Target Corp (TGT), and Wal-Mart (WMT).
Friday, February 04, 2005
Weekly Market Report 02-04-2005
Safe Iraqi elections allows market to rise
By Rick Paler
Sunday’s historic elections in Iraq went off without the terrorism that some expected. Turnout for the election was very high as voters risked being killed to participate in democracy. Initial figures indicate that close to 60% of the nations citizens voted. This was the same percentage of U.S citizens that voted in our last election and we did not have to worry about being killed when we voted. The smooth election removed traders concerns about heavy casualties occurring during the election and allowed the market bulls to push the market higher for the week.
The election alone was not the only factor affecting the markets this week. Additionally we saw a decline in oil prices and OPEC announced that they would leave production at current levels. We continue to see great corporate earnings combined with good economic reports. Ads to this, an increase in merger and acquisition activity and you have a recipe for a higher market.
Earnings continued to come in and this week we saw 93 of the 500 companies that make up the S&P 500 report. To date operating earnings are on target to show 18% growth for the fourth quarter exceeding the streets prior estimates of only 15% - 16%. So what is preventing the market from taking off like a rocket? It is my feeling that corporate guidance for 2005 indicates that the S&P 500 will have earnings growth of around 7%. This is not a bad number and puts growth closer to historical norms. Also expectations are that the Federal Reserve will continue with their policy of rising interest rates. These two factors combined with the continued threat of a terrorist attack are the causes for the cautious sentiment in the market.
M&A activity continued this week with the announcement that SBC Communications (SBC) has agreed to purchase AT&T (T) for $16 billion. Share holders of AT&T will receive 0.77942 shares of SBC common stock or about $18.41 per share and a $1.30 cash dividend.
Quest Communications (Q) has thrown its hat into the ring, when it was reported that the company was making an offer to purchase MCI (MCIP) for $6.3 billion. Verizon Communications (VZ) has been reported to also be in talks to purchase the company.
MetLife (MET) announced that they would acquire Citigroup’s (C) insurance group Travelers Life & Annuity Co. and all of their international insurance business for $11.5 billion.
As a point to note, in January alone $120 billion dollars worth of M&A deal have been announce along with over $30 billion worth of stock repurchase programs. This is a positive for the market and should continue for some time, since corporations are sitting on record amounts of cash. I would also expect more companies to raise their dividends this year to pay out some of this cash.
In corporate earnings news this week Northrop Grumman (NOC), PepsiCo (PEP), Disney (DIS), Google (GOOG), Chubb Corp (CB), Sherwin Williams (SHW) and AFLAC (AFL) all exceeded analyst earnings estimates.
Google (GOOG) surprised the street when they announced an eightfold increase in their fourth quarter net income. The company’s fourth quarter net rose to $204 million or $0.71 per share. Excluding items the company reported earnings of $0.90 per share well ahead of Wall Streets estimates of only $0.77 per share.
Chubb Corp (CB) report that their net income increased six times to $467.6 million or $2.39 per share ahead of analyst estimates. The company also reported that their full year 2004 net income increased 91% over the prior year to $1.55 billion or $8.01 per share. The insurance company also gave 2005 operating income guidance of $7.60 - $8.00 per share.
Paint manufacture Sherwin-Williams (SHW) reported earnings of $82.5 million or $0.57 per share, which is a $16.5% increase over the same period last year. The company earned $393.3 million or $2.72 per share for the full 2004 year. Both results beat Wall Street estimates by a penny.
In other news ConocoPhillips (COP) announced plans to repurchase up to $1 billion of the company’s stock over the next two years. The company’s repurchase plan is to offset dilution from the company’s stock based employee compensation plan.
Adobe Systems Inc. (ADBE) raised their first quarter revenue guidance to $450 million to $470 million from a prior $435 million to $455 million. The company also increased their earnings outlook to $0.47 to $0.51 per share from $0.45 to $0.48 per share. The company cited strong demand for their products including their newly release Acrobat 7.0.
In economic news it was no surprise when it was announced that the Federal Reserve raised interest rates for the sixth time. The increase of 25 basis points puts the Federal Funds rate at 2.50%. The closely watch policy statement remained unchanged indicating that the Federal Reserve would continue with its measured policy of interest rate increases. Indications are that a natural Fed policy would bring rates up to the 3.25% range.
Bond traders pushed rates lower along the yield curve this week. The 5 year Treasury closed yielding 3.66%. The 5 year note ending yielding 4.07% and the 30 year Treasury bond closed at 4.48%.
Next week companies to watch are Bp PLC (BP), Cisco Systems (CSCO), MetLife (MET), Cognizant Technology (CTSH), Dell (DELL), and Unilever (UN).
By Rick Paler
Sunday’s historic elections in Iraq went off without the terrorism that some expected. Turnout for the election was very high as voters risked being killed to participate in democracy. Initial figures indicate that close to 60% of the nations citizens voted. This was the same percentage of U.S citizens that voted in our last election and we did not have to worry about being killed when we voted. The smooth election removed traders concerns about heavy casualties occurring during the election and allowed the market bulls to push the market higher for the week.
The election alone was not the only factor affecting the markets this week. Additionally we saw a decline in oil prices and OPEC announced that they would leave production at current levels. We continue to see great corporate earnings combined with good economic reports. Ads to this, an increase in merger and acquisition activity and you have a recipe for a higher market.
Earnings continued to come in and this week we saw 93 of the 500 companies that make up the S&P 500 report. To date operating earnings are on target to show 18% growth for the fourth quarter exceeding the streets prior estimates of only 15% - 16%. So what is preventing the market from taking off like a rocket? It is my feeling that corporate guidance for 2005 indicates that the S&P 500 will have earnings growth of around 7%. This is not a bad number and puts growth closer to historical norms. Also expectations are that the Federal Reserve will continue with their policy of rising interest rates. These two factors combined with the continued threat of a terrorist attack are the causes for the cautious sentiment in the market.
M&A activity continued this week with the announcement that SBC Communications (SBC) has agreed to purchase AT&T (T) for $16 billion. Share holders of AT&T will receive 0.77942 shares of SBC common stock or about $18.41 per share and a $1.30 cash dividend.
Quest Communications (Q) has thrown its hat into the ring, when it was reported that the company was making an offer to purchase MCI (MCIP) for $6.3 billion. Verizon Communications (VZ) has been reported to also be in talks to purchase the company.
MetLife (MET) announced that they would acquire Citigroup’s (C) insurance group Travelers Life & Annuity Co. and all of their international insurance business for $11.5 billion.
As a point to note, in January alone $120 billion dollars worth of M&A deal have been announce along with over $30 billion worth of stock repurchase programs. This is a positive for the market and should continue for some time, since corporations are sitting on record amounts of cash. I would also expect more companies to raise their dividends this year to pay out some of this cash.
In corporate earnings news this week Northrop Grumman (NOC), PepsiCo (PEP), Disney (DIS), Google (GOOG), Chubb Corp (CB), Sherwin Williams (SHW) and AFLAC (AFL) all exceeded analyst earnings estimates.
Google (GOOG) surprised the street when they announced an eightfold increase in their fourth quarter net income. The company’s fourth quarter net rose to $204 million or $0.71 per share. Excluding items the company reported earnings of $0.90 per share well ahead of Wall Streets estimates of only $0.77 per share.
Chubb Corp (CB) report that their net income increased six times to $467.6 million or $2.39 per share ahead of analyst estimates. The company also reported that their full year 2004 net income increased 91% over the prior year to $1.55 billion or $8.01 per share. The insurance company also gave 2005 operating income guidance of $7.60 - $8.00 per share.
Paint manufacture Sherwin-Williams (SHW) reported earnings of $82.5 million or $0.57 per share, which is a $16.5% increase over the same period last year. The company earned $393.3 million or $2.72 per share for the full 2004 year. Both results beat Wall Street estimates by a penny.
In other news ConocoPhillips (COP) announced plans to repurchase up to $1 billion of the company’s stock over the next two years. The company’s repurchase plan is to offset dilution from the company’s stock based employee compensation plan.
Adobe Systems Inc. (ADBE) raised their first quarter revenue guidance to $450 million to $470 million from a prior $435 million to $455 million. The company also increased their earnings outlook to $0.47 to $0.51 per share from $0.45 to $0.48 per share. The company cited strong demand for their products including their newly release Acrobat 7.0.
In economic news it was no surprise when it was announced that the Federal Reserve raised interest rates for the sixth time. The increase of 25 basis points puts the Federal Funds rate at 2.50%. The closely watch policy statement remained unchanged indicating that the Federal Reserve would continue with its measured policy of interest rate increases. Indications are that a natural Fed policy would bring rates up to the 3.25% range.
Bond traders pushed rates lower along the yield curve this week. The 5 year Treasury closed yielding 3.66%. The 5 year note ending yielding 4.07% and the 30 year Treasury bond closed at 4.48%.
Next week companies to watch are Bp PLC (BP), Cisco Systems (CSCO), MetLife (MET), Cognizant Technology (CTSH), Dell (DELL), and Unilever (UN).
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